The state of California yesterday issued its first annual data-breach report saying for 2012 it recorded a total of 131 data breach incidents that put the personal data of more than 2.5 million Californians at risk.

According to California's report, the retail industry reported the most data spills last year, accounting for 26% of the total, followed by finance and insurance at 23%. More than half of last year's incidents reported in California involved Social Security numbers. And more than half of all the reported data breaches -- 55% -- were the result of deliberate intrusions by outsiders or unauthorized insiders.

"Particularly striking is the impact of the failure to encrypt sensitive personal information," said California Attorney General Kamala Harris in her statement accompanying the state's 2012 data-breach report. "It has been ten years since we realized the vulnerability of personal information on stolen laptops, lost data tapes, and misdirected emails. If encryption had been used, over 1.4 million Californians would not have had their information put at risk in 2012. That number represents more than half of the 2.5 million people affected by the 131 breaches covered in the report."

California has had data-breach notification statutes in effect since 2003 which require California residents to be notified if their personal information is acquired by an unauthorized person, or believed to have been acquired. In 2012, for the first time, those subject to the California law were required to provide copies of their notices to the Attorney General when the breach involved more than 500 Californians, the report points out.

The type of personal information deemed sensitive includes Social Security numbers, driver's license of California ID cards, financial account or health-related information. Yesterday was the first time California published a report summarizing annual data-breach incidents.

According to the report, of the 131 breaches, government held responsibility for 8% of them, healthcare industry 15%, education 8%, professional services 5%, retail industry 26% and financial and insurance industries 23%, with 15% of the remainder lumped as "other."An analysis of "type of failure" showed that 55% were tied to computers and security failures, including point-of-sale devices at merchants being compromised by skimming devices used by criminals to steal financial information.

In this category called "logical failures," the California data-breach report noted that "two of the five largest breaches affecting more than 100,000 individuals were caused by outside hackers. Valve Corporation, an online game software company, reported an intrusion affecting 509,000 individuals in February 2012, and Global Payments, Inc., a processor of electronic payments transactions, reported an intrusion affecting 139,034 individuals in July 2012. Ten percent of the breaches (13) were caused by insiders -- employees, contractors, vendors, customers -- who intentionally accessed systems and data without authority."

In the report, "physical failures" -- comprising 27% of the total -- were said to be related to lost or stolen hardware. Two of the five largest incidents there were said to be the California Department of Social Services reporting a lost computer storage device containing information on 845,000 parents, children and caregivers in March 2012, and Emory Healthcare, reporting missing data disks containing financial and medical information on 318,000 patients in May 2012.

A third category, "procedural failures," constituted 18% of the overall breach incidents, and of these processing errors such as misdirected physical and electronic mail or unintentional web postings, an incident reported May 2012 involving First Data Corporation was highlighted as information on 108,500 merchants was "inadvertently transmitted to outside firms," according to the report.

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